Suppose that in a year Indonesia can produce either 50 million tonnes of petrol or 20 million tonnes of iron or any linear combination, for example, 25 million tonnes of petrol and 10 million tonnes of iron. Also suppose that in a year Australia can produce either 80 million tonnes of petrol or 64 million tonnes of iron or any linear combination, for example, 20 million tonnes of petrol and 48 million tonnes of iron. e. Suppose Australia wants 30 million tonnes of petrol and Indonesia wants 20 million tonnes of petrol and as much iron as they can get. Show that Indonesia and Australia can have more iron while still meeting their petrol requirements when they specialise and trade than when they do not

Suppose that in a year Indonesia can produce either 50 million tonnes of petrol or 20 million tonnes of iron or any linear combination, for example, 25 million tonnes of petrol and 10 million tonnes of iron. Also suppose that in a year Australia can produce either 80 million tonnes of petrol or 64 million tonnes of iron or any linear combination, for example, 20 million tonnes of petrol and 48 million tonnes of iron. e. Suppose Australia wants 30 million tonnes of petrol and Indonesia wants 20 million tonnes of petrol and as much iron as they can get. Show that Indonesia and Australia can have more iron while still meeting their petrol requirements when they specialise and trade than when they do not

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter33: International Trade

Section: Chapter Questions

Problem 3SCQ: In France it takes one worker to produce one sweater, and one worker to produce one bottle of wine....

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In France it takes one worker to produce one sweater, and one worker to produce one bottle of wine. In Tunisia it takes two workers to produce one sweater, and three workers to produce one bottle of wine. Who has the absolute advantage in production of sweaters? Who has the absolute advantage in the production of wine? How can you tell?
In a world where the only goods are cell phones and cereal: Jennereelam can produce: 80m kilos of cereal, and 200k cell phones, while Jonathannadu can produce: 30m kilos of cereal, and 15k cell phones. Even though Jennereelam is a bigger economy and can produce more of each product than Jonathannadu, this guy named Ricardo insists that they will both benefit if they trade. What is Ricardo's argument called, and why does he make the claim?
Germany and Sweden produce cars and kitchen appliances. Germany can produce 5 million cars per year if it produces only cars and no kitchen appliances, or 10 million kitchen appliances per year if it produces only kitchen appliances and no cars. Sweden can produce 1 million cars per year if it produces only cars and no kitchen appliances, or 3 million kitchen appliances per year if it produces only kitchen appliances and no cars. What is Germany’s opportunity cost of manufacturing 1 million cars per year? (Hint: Your answer should be in terms of millions of kitchen appliances per year.) What is Sweden’s opportunity cost of manufacturing 1 million cars per year? (Hint: Your answer should be in terms of millions of kitchen appliances per year.) What is Germany’s opportunity cost of manufacturing 1 million kitchen appliances per year? (Hint: Your answer should be in terms of millions of cars per year.) What is Sweden’s opportunity cost of manufacturing 1 million kitchen appliances per…
Suppose that Portugal and Switzerland both produce beer and stained glass. Portugal's opportunity cost of producing a pane of stained glass is 4 barrels of beer while Switzerland's opportunity cost of producing a pane of stained glass is 10 barrels of beer. By comparing the opportunity cost of producing stained glass in the two countries, you can tell that (a. Portugal, b. Switzerland) has a comparative advantage in the production of stained glass and (a. Portugal, b. Switzerland) has a comparative advantage in the production of beer. Suppose that Portugal and Switzerland consider trading stained glass and beer with each other. Portugal can gain from specialization and trade as long as it receives more than ____ of beer for each pane of stained glass it exports to Switzerland. Similarly, Switzerland can gain from trade as long as it receives more than ____ of stained glass for each barrel of beer it exports to Portugal. Based on your answer to the last question,…
Suppose that there are two countries, the North and the South. Given the North's resources, it can produce 4 Cars in an hour or 1 unit of wheat in an hour. Given the South's resources, it can produce 1 car per hour or 4 units of wheat in an hour. Both countries have forty hours in total to produce wheat and cars. Finally, the goal of each country is to have the most possible cars and wheat, but also to always have an equal amount of each. In other words, 10 cars and 10 wheat is just as valuable as 11 cars and 10 units of wheat, or 10 cars and 11 units of wheat, but 11 cars and 11 wheat would make the country even better off. The question below relates to the PPF for the North and the South. While you do not need to turn in a graph of the PPF, they may be helpful to answer these questions. Finally, the first set of questions refers to a world where the North and South cannot trade, while the second set of questions refers to a world where they can trade. In the latter set of…
Suppose that there are two countries; Country 1 and Country 2. Country 1 is capital abundant and country 2 is labor abundant. X is capital intensive and Y is labor intensive. Assume that Country 1 is a large country and country 2 is a small country. Answer the following question: Now, suppose that Country 2’s labor supply increases. Show the pregrowth and after growth production and consumption points on a figure. Clearly explain how the production and consumption of commodity X and Y would change after growth if we assume that both X and Y are normal goods.
Suppose that country A and country B currently have identical production possibility frontiers, but that country A devotes only 5 per cent of its resources producing capital goods over each of the next 10 years, whereas country B devotes 30 per cent. Which country is likely to experience more rapid economic growth in the future? Illustrate using a production possibility frontier graph. Your graph should include production possibility frontiers for country A today and in 10 years, and for country B today and in 10 years.
Suppose that France and Denmark both produce fish and olives. France's opportunity cost of producing a crate of olives is 3 pounds of fish while Denmark's opportunity cost of producing a crate of olives is 11 pounds of fish. By comparing the opportunity cost of producing olives in the two countries, you can tell that has a comparative advantage in the production of olives and has a comparative advantage in the production of fish. Suppose that France and Denmark consider trading olives and fish with each other. France can gain from specialization and trade as long as it receives more than of fish for each crate of olives it exports to Denmark. Similarly, Denmark can gain from trade as long as it receives more than of olives for each pound of fish it exports to France. Based on your answer to the last question, which of the following prices of trade (that is, price of olives in terms of fish) would allow both Denmark and France to gain from trade? Check…
If Portugal has a total of 90 man-hours of resources available for production, while England has only 30, what are the resource costs of wine and cloth? a. Wine costs 1/2 man-hours/bottle and cloth costs 1/2 man-hours/yard in England b. Wine costs 1 man-hour/bottle and cloth costs 1 man-hour/yard in England c. Cloth costs 1 man-hours/yard and win costs 1 man-hours/bottle in Portugal d. Wine costs 1/2 yards/bottle and cloth costs 2 bottles/yard in Portugal
Suppose in a year an American worker can produce 100 shirts or 20 computers, while a Chinese worker can produce 100 shirts or 10 computers.Graph PPC for the 2 countries
Comparing labor productivity , suppose the United States has an absolute advantage over Costa Rica in the production of calculators and towels . In the United States , a worker can produce 4 calculators or 400 towels in 10 hours . In Costa Rica , a worker can produce 1 calculator or 100 towels in the same amount of time . Under these conditions , would Costa Rica specialize in calculators and trade for towels ? Would Costa Rica specialize in towels and trade for calculators ? I need urgent..
Consider two countries, A and B. Assume that both countries have identical physical endowments of iron ore. In country A, any profits made from mining the iron ore are subject to confiscation by the government. While in country B, there is no such risk. How does the risk of expropriation affect the economic success of the two nations? Which nation would you think would be richer? Why? Use vocabulary learned in our textbook chapters to explain. Given your answer to the above, why is there widespread political support for government policies that expropriate resources from some groups for the sole purpose of handing them out to other groups? Consider this: How do uncontrolled ransomware attacks destabilize the rule of law?